CzechInvest anticipates billion-crown investments from China

The investments will be primarily in the automotive industry, mechanical engineering and electrical engineering.

11.02.2016

In 2015 CzechInvest negotiated investments from China in the value of more than CZK 1 billion. This represents tremendous growth in comparison with the previous year, when the annual volume of Chinese investments fell short of CZK 500 million. More investments, which could bring more than CZK 5 billion to the Czech Republic, are under discussion. The latest investment enquiries were elicited by CzechInvest, led by CEO Karel Kučera, during a visit to China.

“The Czech Republic is finally starting to reach the level of other countries into which Chinese capital has been flowing since 2003,” says Karel Kučera. “For example, China was the biggest investor in Germany in 2014 with a nearly 20% share in all investments. In the same year, China invested 12 billion dollars in the United States and 18 billion dollars in the EU.”

In connection with an official mission undertaken by Prime Minister Bohuslav Sobotka, CzechInvest met with existing and potential investors in Shanghai and the provinces of Anhui, Jiangsu, Zhejiang, Fujian and Liaoning. CzechInvest CEO Karel Kučera met with representatives of several Chinese firms that already have operations in the Czech Republic. “We discussed the development of their investments, their expansion and transfer of other investment projects and plans to the Czech Republic,” says Kučera.

New investments

In the course of the trip, several meetings were held also with potential new investors. “We received the largest number of enquiries from firms in the automotive industry, mechanical engineering and electrical engineering, especially with respect to cooperation on the development of new high-tech products. The Czech Republic has a good name in these fields in China and Asia,” says Kučera. “In most cases, the value of the potential projects that we discussed was around CZK 1 billion.”

Due to the different systems in the Czech Republic and China, the aspects dealt with included mainly details, specifically the project implementation process from establishment of a company to the permit processes connected with construction of a manufacturing plant, scheduling of individual steps and associated costs. Visits of several unnamed Chinese firms in the Czech Republic will follow the commenced negotiations in 2016. A visit by a delegation of businesspeople from Liaoning province has also been planned.

Investments mediated to date

To date, CzechInvest has helped to mediate 12 investment projects of Chinese firms in the combined value of 2.6 billion with the creation of more than 1,500 jobs. In comparison with other foreign investors, including those from other Asian countries, this is still not a significant figure. “The initiated investments could soon at least even out this imbalance,” Kučera adds.

How to deal with Chinese counterparts

CzechInvest has had a foreign office in China since 2002. In order to more effectively target locations of interest, the office was relocated from Hong Kong to Shanghai in 2011 and therefore has extensive experience with the rules of negotiating with Chinese counterparts. It is important to establish friendly relations as soon as possible; business will follow later,” emphasises Ondřej Koc, CzechInvest’s representative in Shanghai. “In subsequent communication it is necessary to be patient, as the Chinese are not used to the European tempo. The language barrier also plays a role. It is almost a necessity to have basic materials in the Chinese language.”